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Nissan hits another JV bumper on Indian roads

When It Comes To Joint Ventures, India Has Again Proved To Be A Difficult Terrain For Japan’s USD 100-billion Auto Giant Nissan, With Partner Ashok Leyland Dragging It To Court Alleging Violation Of Local Licensing Conditions And Breach Of Partnership Agreement.

PTI | Updated on: 07 Mar 2016, 12:17:34 AM

New Delhi :

When it comes to joint ventures, India has again proved to be a difficult terrain for Japan’s USD 100-billion auto giant Nissan, with partner Ashok Leyland dragging it to court alleging violation of local licensing conditions and breach of partnership agreement.

While Nissan’s Leyland JV has hit a roadblock after eight years of togetherness, its much-publicised proposed partnership with Bajaj Auto to make ultra-low cost cars could never take off and had to be shelved eventually.

Besides, Nissan’s global alliance partner Renault also had to face partnership blues in India when its tie-up with Mahindra and Mahindra ran into rough weather and the Indian auto giant bought out the foreign partner from their JV here.

Another tie-up that broke in India was Nissan’s marketing partnership with Hover Automotive, which was promoted as a master franchise concept in the country and ended up as yet another unravelling of various partnerships sewed or proposed by Renault-Nissan’s global chief Carlos Ghosn, who has always been known to be bullish on the India growth story.

When asked about numerous JV failures, Nissan India put up a brave face and said that its “joint ventures with Ashok Leyland are the only joint ventures Nissan have in India” and the assumption that it had multiple JVs was incorrect.

“The alliance between Nissan and Renault is the most enduring and successful in the history of the auto industry.  Our growth worldwide has been has built on long-term partnerships.

“In case of Ashok Leyland, we are disappointed they walked away from negotiations and took the most serious option of legal action, which we maintain is unwarranted. Nissan wants an amicable solution so we can concentrate on building great vehicles for our customers,” a Nissan India spokesperson told PTI in reply to queries about problems with the JVs.

While an Ashok Leyland spokesperson declined to comment on queries regarding the problems in the company’s partnership with Nissan, the tie-up is headed for a break-up with both the sides having served notices and counter-notices to each other.

The Indian partner has dragged Renault Nissan Automotive India Pvt Ltd (RNAIPL) to the court over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations.

In May 2008, Ashok Leyland and Nissan had formed three JVs

Ashok Leyland Nissan Vehicles Ltd (ALNVL) for vehicles manufacturing, Nissan Ashok Leyland Power Train Ltd (NALPT) for making power trains, and a technology JV Nissan Ashok Leyland Technologies Ltd (NALT).

The partners have invested about Rs 1,000 crore as equity between then.

Adding to the troubled relations, Nissan has served a termination notice for the technology joint venture and the differences continue to grow between the partners.

Ashok Leyland, a 51 per cent shareholder in its joint venture with Japan’s Nissan Motor, has filed the suit to “protect and safeguard the interest” of the JV company, Ashok Leyland Nissan Vehicles Ltd, saying it was not getting the necessary cooperation from the members of the board representing the remaining 49 per cent shareholding.

Ashok Leyland is engaged in the business of manufacturing and selling commercial vehicles for the last 65 years and had a turnover of USD 2.2 billion in 2014-15 with present across 50 countries.

Japanese carmaker Nissan has hiked prices of its entire range in India by up to 4 per cent on account of new levies announced in Union Budget 2016-17.

“The increase in prices is in the range of 1-3.5 per cent across models,” a company spokesperson told PTI.

Elaborating further, the spokesperson said the company has raised prices of Datsun models by 1 per cent and that of diesel models, including Terrano and mid sized sedan Sunny, by 3.25-3.5 per cent.

Nissan Motor India, a wholly-owned subsidiary of Nissan Motor Co, sells a range of vehicles from entry-level model Micra Active to SUV Terrano priced between Rs 4.47 lakh and Rs 13.20 lakh.

Datsun range of vehicles include the entry-level small-car Datsun Go and multi-purpose vehicle Datsun Go Plus which are priced between Rs 3.23 lakh and Rs 4.78 lakh (all prices ex-showroom Delhi).

Already, a host of automakers including Maruti Suzuki India and Tata Motors have announced increase in vehicle prices.

Last week Hyundai, Mahindra and Honda Cars announced price hikes of up to Rs 82,906 across their entire product range.

Earlier, Maruti Suzuki had hiked prices of its vehicles across models in the range of Rs 1,441 to Rs 34,494 in order to offset the impact of infrastructure cess proposed in Budget 2016-17.

German luxury carmaker Mercedes-Benz and Tata Motors have also announced to raise prices of their entire product portfolios.

While Mercedes has announced to hike prices by up to Rs 5 lakh from March 15, Tata Motors has raised prices of passenger vehicles in the range of Rs 2,000 and Rs 35,000.

The government has decided to impose 2.5 per cent cess on diesel vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,500cc while higher engine capacity and SUVs and bigger sedans were slapped with a cess of 4 per cent on the value of the car.

These are over and above a cess of 1 per cent on petrol/ LPG/CNG driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,200cc.

Finance Minister Arun Jaitley also proposed to collect tax at source at the rate of 1 per cent on purchase of luxury cars exceeding value of Rs 10 lakh.

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First Published : 07 Mar 2016, 12:00:00 AM